Kaye Whiteman
Nigeria is blessed with fantastic weather. For that reason, many of us are not necessarily compelled to prepare seriously such as ensure that we listen to meteorological report before going out. Thus it follows that even from the point of view of dealing with natural phenomenon, we never had very impelling need to develop a culture of planning preparation. Consequently our attitude as a people has always been more of “whatever we meet on the way, we take”. Unfortunately, people who adopt this approach to life usually encounter at least one day of reckoning when they have to pay for their unpreparedness.
In late 1970’s and early 1980’s our economy encountered such “a day of reckoning” when the oil boom ended and we discovered that we failed woefully to utilize the benefits of enormous dollar inflows to place our economy on the map of the “strong” and “developed”. We paid dearly for it until the return of the recent boom which has again ended on same sad note: nothing to show for it. Just as in days of austerity measures, the price this time is heavy and painful. Naira now exchanges with a single dollar at the rate of N150. The slide may still be on.
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So it is also with the economy. Rather than plan and put in place policies, processes and programmes that will ensure that this economy keys into a long-run growth-pace, our policy makers have busied themselves the more with crafting “scams in socio-economic policy garbs” in pursuit of their selfish objectives. Worse still, because not many of us are trained to appreciate economic issues, it becomes very easy for them to prove how a programme with clearly dangerous and economy-impoverishing medium/long-term macroeconomic consequences has become what the economy simply needs to join the league of the developed. For them, the satisfying condition however, is that such well-packaged policy-clothed-scams must look very credible in the eyes of the public as well as be capable of delivering on the selfish plans of those who structured them. Consequently robust plans and programmes that hold the ace to sustainable economic development are jettisoned through the invocation of one event which contexts may not be the same, but which shows where such ideas failed.
Therefore when some economists sit back and proclaim with ‘high sense’ of professional ‘erudition’ that the falling naira is not anybody’s fault but the economic fundamentals, I fold my hands in shock. Of a truth, the fundamentals support a fall in currency value. But who has the responsibility for nurturing those fundamentals? Economic fundamentals just like corporate fundamentals are conceived, consciously nurtured, its developmental strategies crafted within the bounds of reality, implemented religiously and fine-tuned as regularly as appropriate, necessary follow ups made, errant members of staff disciplined without considering party or ethnic affiliation etc. The shareholders of a company will not accept bad corporate performance because there is reduction in the prospects of one possible stream of revenue. They expect that these would have been anticipated and adequate provisions for them made. The inability of the management to anticipate such crisis and articulate a strategy to deal with them can as well make all of them lose their jobs. These principles underlying corporate management are consistent with successful management of an economy. Therefore many have to be blamed for the current crises: the legislature, the ministers, the police and judiciary who have regrettably allowed these rots over the years and most importantly the generality of Nigerians who tolerate corruption and the poignant rape of this country.
Thus in the same way as in corporate planning, it is expected that we would have anticipated that one day, the boom in oil prices would end as it once ended in late seventies / early eighties after the oil boom of 1973 Yom-Kipur war. They would have known that the now ended CBN’s monetary-inflation driven capital market boom that placed hot-money in the hands of many short-term speculators who were not prepared for long-term investments through margin credits would end. Not only that it would just end but would destroy many investment plans and programmes in its wake. Our policy makers would have known that any person or economy whose livelihood depends on only one thing will most likely suffer the fate of those who put all their eggs in one basket. The CBN would have known that accumulating reserves beyond adequacy levels without using the extras to help develop priority areas that support enterprise and thus sustainable economic development that will help us better withstand economic crisis is tantamount to losing the opportunity for speedy economic development as well as saving for some corrupt politicians who will eventually decimate that external reserve pile-up. Because of these neglected essentials, we boxed ourselves into the ‘no-oil-money no-prosperity’ or more correctly ‘declining oil-money falling naira’ mentality.
Now the naira has started its nosedive and who pays the most; who gains the most? Even though all of us will face the consequences of rising import and domestic prices, poor corporate performance, mass retrenchments, increased criminality etc., some has the capacity to counterbalance the possible negative effects of these on their personal economies. Because the fundamentals have not been built over the years to withstand negative oil price shock and the CBN cannot aggressively intervene with our defined reserve size, it is only fair to guess that the naira/dollar exchange rate may fall to about N200/US$1.00 which opens immense opportunities for speculation. As we know, earnings into the federation account must be distributed to the states and invariably the politicians. This must also be done in dollar units. In an era of currency scarcity and heightened speculation, the temptations of round-tripping cannot be easily evaded. So we may conclude again that there will be more prosperity in this crisis to the advantage of those who have constitutional rights to share the scarce dollars to the disadvantage of the rest of Nigerians.
But this situation should not be allowed to prevail endlessly in this country. If we did not learn from the experience of Nigeria’s macroeconomic crash in the early eighties and the duddling economy of the nineties then this crises presents another opportunity for us to begin to think of how to do it right. Whereas it is without doubt that the key to immediate return to stable Nigerian economy is the rebound of oil prices, it is equally realistic to assume that it is wishful thinking at this point in time. Unless there is serious crises in the Middle East or among one or two key oil supplying countries it will be like expecting a rare supernatural occurrence to believe that oil prices will shoot up in the short-term. Individual and corporate demand levels for oil in many countries have adjusted downwards in response to global crises and will not likely shoot up suddenly. So what do we need to do in this circumstance?
There are no one solve-it all-approach to the current situation. However, a few short-term and long-term solutions can be proffered. In the menu of possible short-term solutions, the following should be urgently considered: further reduction in public sector spending particularly public sector imports, delayed payment of statutory allocation or its payment in naira rather than in dollars; strongly encouraging all payments to Nigerians for transactions being denominated in naira; initiation of a gradual process of monetary contraction as opposed to expansion. Again for sustainable (including short-term) economic development, the classical idea of easy taxes, sound money, balanced budget (or at worst minimal deficits) and genuine zero tolerance on public sector corruptions should be pursued.
